Bill would allow municipalities to strengthen pension plans

Cities would be able to financially strengthen their retirement plans for police officers and firefighters under a bill adopted Wednesday by a Senate committee.

Sen. Rob Bradley, R-Fleming Island, said the legislation (SB 246) seeks to address the roughly 60 percent of 350 municipal pension plans for thousands of police and firefighters in Florida deemed to be below an adequate level to fund future retirement benefits.

“The situation we have right now with regards to the local government pensions can correctly be described as a ticking time bomb,” Bradley said.

He said the legislation mirrors a bill passed by the Senate in the 2013 session that did not win approval in the House, as the two chambers split over another plan to reform the state’s pension fund for state workers, teachers and public employees.

“We’re back here this year trying to again help our friends in the public safety sector have a solid retirement so that when it comes time for them to retire there is money there to pay their benefits,” Bradley said.

The bill, co-sponsored by Sen. Jeremy Ring, D-Margate, divides the local pension plans, such as those offered by the cities of Sarasota and Venice, into two groups: Financially “healthy” plans, with enough pension funding to pay for at least 80 percent of their future liabilities, and “unhealthy” plans that can fund less than 80 percent of their projected costs.

Passed the Senate Governmental Oversight and Accountability Committee in a unanimous vote, the bill uses a complicated formula that would essentially require the cities with underfunded pension plans to use 50 percent of the annual growth in the state insurance premium tax to bring their funds up to at least 80 percent.

The legislation also sets guidelines for cities with healthier pension funds, including a requirement that they use some of the insurance premium taxes to create 401(k)-type plans in addition to the traditional “defined benefit” pension programs.

“It’s complicated but it’s not impossible,” Bradley said of the funding formula.

Neither the cities nor the unions that represent the police and firefighters are “going to be happy” about the bill, but he also said it represents a chance to resolve the problem, Bradley said.

“It’s not a perfect bill,” he said. “It strikes an appropriate balance between all interests.”

But the cities made clear that they do not support the current bill.

Kraig Conn, a lobbyist for the Florida League of Cities, said there are some favorable provisions in the bill, including giving the cities the ability to negotiate lower pension benefits with police and firefighters.

But Conn said the bill does not give cities enough flexibility on the use of insurance premium taxes — which has been the traditional source for funding police and firefighter pensions. For instance, the bill would require the cities with well-funded pension plans for the first time to use some of the funding to create the 401(k)-type benefit plans, Conn said.

The bill also attempts to resolve a dispute that began in 2012 when the state Department of Management Services issued a letter guiding cities on the use of the insurance premium taxes in funding pension benefits.

Conn said the bill unfairly allows some cities to use guidelines under a “grandfather” provision, while blocking other cities from using them.

Lobbyists representing police and firefighter unions were more favorable about the bill, although they want a guarantee that minimum pension benefits would not drop below a level set in 1999; a similar provision was added to the 2013 bill and it drew the support of the unions.

Ring, the chairman of the Governmental Oversight and Accountability Committee, acknowledged that the local pension bill could again get caught up in the debate over changes to the state’s major pension fund in the 2014 session. The House had sought this year to require newly hired state workers, teachers and county employees to be placed in a 401(k)-type plan rather than the traditional pension program.

The House and Senate couldn’t reconcile the competing bills.

However, Ring said as of now his committee has no plans to advance a bill changing the state’s pension fund. But House Speaker Will Weatherford, R-Wesley Chapel, has made it a priority to revamp the state pension fund.

The Senate pension bill has two more committee stops before it can reach the Senate floor.

Lloyd Dunkelberger

Lloyd Dunkelberger is the Htpolitics.com Capital Bureau Chief.
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Last modified: December 11, 2013
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